Shadow energy secretary Meg Hillier to tell Labour conference that soaring gas and electricity prices are 'national scandal'
The Labour party is to put the UK's big six energy companies "on notice", pledging that the next Labour government will break up their "stranglehold" of the market in order to tackle soaring bills.
Meg Hillier, shadow secretary of state for energy and climate change, will tell the Labour party conference in Liverpool that soaring gas and electricity prices are a "great national scandal".
Labour will pledge to break up the existing market which allows the major energy companies to both generate and sell energy to households, which the party argues fails to minimise prices and prevents new companies entering the market.
"We will also insist that the [big six] make their prices and their bills crystal clear so we can all see the true cost of our energy," Hillier will say. She will signal Labour's readiness to make major interventions in the market, saying: "They may be private companies, but they should deliver a public service."
The move to break up the existing "vertically integrated" market goes far beyond the measures being taken by the government, although the Liberal Democrat energy secretary, Chris Huhne, promised last week to force more transparency in billing.
"We are going to make sure that no one is being ripped off by the energy companies and at the moment they are," said Labour MP Barry Gardiner, who sits on the energy and climate change select committee. "The government promised electricity market reform, but it is not delivering. It is tinkering at the edges."
The Labour energy policies, trailed by leader Ed Miliband on the eve of the conference, would require all energy generators to pool their power, from which any company could buy it and sell it to customers. This would reduce utility bills for 80% of users, Labour claims. At the moment, the big six both generate and sell power, meaning the true cost of generation is hidden and the lowest prices are not guaranteed by the market.
Labour also argues that new generators, such as those selling renewable energy, have to sell their power to the big six, who supply 99% of the UK's homes. But new entrants struggle, Gardiner says, because they are paid less than the big six pay their own generating divisions. "They can't make a profit so they can't compete," said Gardiner.
Labour will also attack the way the big six bill for their services. "The energy companies are doing a fantastic job of confusion marketing," said Gardiner. "The only way to fix this is to stop the amazing multiplicity of tariffs."
Labour is not specifying a maximum number of tariffs, but Gardiner said: "Why any company should need more than, say, 10 to 12, tariffs is beyond me unless you want to confuse your customer."
Hillier will take the opportunity to attack Huhne, saying: "There's a winter fuel crisis coming down the track, and ministers seem helpless to prevent it. This government hasn't moved on since Edwina Currie told cold, poor people to put on an extra woolly jumper."
An energy industry source told the Guardian that such a major reform as introducing a pool would be a mistake at a time when the big energy companies were dealing with the uncertainty of the government's reforms to the energy market. He said the big six were being used as a "political football" at the moment but that the investment cycle was much longer than the electoral cycle and, while it was unwelcome, the companies would ride it out. He added that increased transparency in billing would also reveal the proportion of bills that went to green taxes, suggesting this would make consumers less willing to pay those taxes.
The government's proposed reforms to the UK's energy market will introduce a system of guaranteed payments for low carbon energy, a tax on carbon dioxide pollution and a limit to the greenhouse gas emissions that can be pumped out of power stations. These market interventions are the first significant moves since the UK's energy market was entirely liberalised in the 1980s and 1990s.
The UK has had one of the most free energy markets in the world, which supporters say kept prices low but critics say starved the industry of investment. Most observers now agree hundreds of billions of pounds in investment will be needed in coming decades to deliver an energy market which provides reliable low-carbon energy at least cost.
Source: http://www.guardian.co.uk/environment/2011/sep/27/labour-big-six-energy-companies
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